Skip to main Content

Paul Jenkins: AGIA gone, ACES off the books - Sarah's spell is almost broken

  • Author: Paul Jenkins
    | Alaska opinion
  • Updated: September 28, 2016
  • Published January 17, 2014

Sarah Palin, the worst thing to happen to Alaska since the Spanish flu, managed only two major legislative accomplishments in her brief, tumultuous tenure as the state's chief executive and now -- thankfully and at long last -- both have been repudiated.

It has taken Alaska a long time to find its way back to square one from her disastrous two-year stint, but make no mistake, there are those who would return to that morass in a heartbeat.

Palin, in a single, misbegotten year, crafted a tax scheme guaranteeing future reduced North Slope investment and production -- and dwindling state revenues -- and she engineered a gas line licensing scam to block North Slope producers from building or controlling a large-diameter natural gas line they were expected to finance.

Riding a populist frenzy stirred by political corruption and basking in her then-celestial poll numbers, Palin managed in 2007 to bully a timorous Legislature into swallowing Alaska's Clear and Equitable Share oil tax, a punitive, progressive levy. It virtually guaranteed Alaska's oil woes by making the North Slope as attractive to investors as chicken pox.

Her vision was mean enough, but by the time her Democrat pals finished massaging the measure, it was a miracle anybody was working on the North Slope. The most onerous provisions of ACES gasped their last in long-overdue legislative tax reform last year.

As if ACES were not bad enough -- even Democrats eventually joined the reform chorus -- Palin also in 2007 ponied up the Alaska Gasline Inducement Act. It was her baby, the perfect vehicle to punish the industry for transgressions real and imagined on the trans-Alaska oil pipeline. She even named her mutt AGIA.

The governor's Web page says AGIA was "to encourage a major natural gas pipeline project from the North Slope of Alaska via an open and competitive process." It was to maximize benefits to Alaskans and provide "investment inducements to a private sector pipeline project."

It was a bust. While North Slope producers were discouraged from participating, lawmakers awarded an AGIA "license" to the TransCanada Corp. pipeline company -- not to build a line but to win Federal Energy Regulatory Commission certification. TransCanada was to be reimbursed up to $500 million.

Alaska so far has anted up $300 million, something Democrats -- scrubbing off their own fingerprints -- pretend is the fault of Gov. Sean Parnell and Republicans. AGIA passed both chambers 57-1, with Republicans and Democrats alike voting for passage. Only Republican Rep. Ralph Samuels voted no.

Now that law, too, is toast with Parnell's announcement that Alaska is abandoning AGIA to invest in a large-diameter pipeline natural gas project from the North Slope.

He said Alaska and TransCanada agreed to "amicably" end their AGIA agreement for an arrangement including BP, ExxonMobil, ConocoPhillips, TransCanada, the Alaska Gasline Development Corp., and the Revenue and Natural Resources departments.

That would bring Alaska back to about where it was when then-Gov. Frank Murkowski, in the waning days of his administration, was close to a gas line deal with North Slope producers. That deal, with legislative approval, would have had Alaska owning a piece of the line.

The new plan, with a price tag of perhaps $65 billion -- with Alaska chipping in up to 25 percent-- would include a 42-inch diameter pipeline from Prudhoe Bay and Point Thomson to an LNG plant and export terminal, probably in Nikiski. The line would move -- by the time some is bled off here, and some there -- up to 2.5 billion cubic feet of natural gas daily to Asian commercial markets.

Would it pay off? Platts says liquefied natural gas for January delivery to Asia increased 7.2 percent from December, to $18.958 per million British thermal units, but the payoff is only one of many questions. The Legislature will be neck deep in the hows, whys and ifs of a gas megaproject in the coming session.

Mind you, there are those who yearn for Palin's Alaska, complete with busted oil revenues, withered investment, stunted production and a cowed industry. This is certain: If they successfully repeal ACES reform, we might as well return to AGIA too.

There will be no gas line, and the consequences of Palin's blurred vision -- an Alaska in fiscal tatters -- will become reality. It will be ugly.

You betcha.

Paul Jenkins is editor of the

Paul Jenkins